Homebuyers

What is a Lowball Offer on a Home? The Pros, Cons, Pitfalls, and How to Do It Right

In today’s housing market, where home prices sometimes seem stubbornly out of reach, some buyers are taking a different approach: Making lowball offers.  

But what does making a lowball offer on a home really mean? And more importantly, is it a smart move?

When done right, submitting a lowball offer for less than the asking price can save you thousands of dollars. When done wrong, it may just cost you the home you hoped to live in.

“You can lowball some property owners, but remember that it is not always about money for sellers,” said Rebecca Hidalgo Rains, CEO and designated broker of Integrity All Stars Realty in Phoenix, Ariz. “Don’t be afraid to lowball a seller, but know the moment to do it. Do your research.”

Here’s what to know before you throw out a low offer.

What is lowballing a home offer?

Lowballing is when a buyer submits an offer well below the asking price, hoping to score a deal.

Just how much is “well below”? That depends on the specific market. If homes in a certain city or neighborhood are sitting unsold for months, a seller might be willing to negotiate.

“If a home is significantly overpriced and market data supports a much lower value, what seems like a ‘lowball’ offer may actually be a fair one,” said John Olivero at Olivero Team at Keller Williams in Goshen, N.Y. He generally cautions against making a lowball offer. “In those cases, a well-supported offer based on facts can still open the door to negotiations.”

However, if listings are flying off the market with multiple bids, a lowball offer will likely be ignored—or worse, offend the seller altogether.

Tip: Before making a lowball offer, check the sale prices of similar homes and how long it took them to sell. If you can justify your number, the seller is more likely to take you seriously.

The pros of lowballing a home offer

One of the biggest advantages of lowballing is obvious: If it works, you save money.

Sellers in a tough spot—maybe they’re relocating, or their home has been sitting unsold for months—might be willing to accept less just to move on. Even if they don’t accept your first offer, it can start a negotiation that lands you at a lower price than you expected.

If a seller counters your offer instead of rejecting it outright, that’s a signal they’re open to having a negotiation.

And if they don’t budge? That tells you they’re either confident in their price or not in a hurry to sell. Either way, you get valuable information without spending more than you need.

Tip: If you’re going low, make your offer as attractive as possible. A cash offer, a flexible closing date, or waiving minor contingencies can make a seller more willing to consider a lower price.

The cons of lowballing a home offer

The biggest risk of lowballing is that you could lose out on the home. A seller with other offers on the table won’t waste time haggling with someone who isn’t serious.

“I have had clients lowball so badly that the seller does not want to work with them,” said Rains.

Say a home is listed at $500,000, with multiple buyers circling. If you offer $400,000, thinking you’ll “start the conversation,” the seller may not even bother responding. Meanwhile, another buyer comes in at $510,000 and wins the home outright.

Another downside is that it can be time-consuming. If your lowball offer is rejected, you may spend days or even weeks negotiating, only to end up paying close to the original price anyway.

Tip: If you’re lowballing, be realistic. A 10% reduction might work in some cases. Offering 30% under the asking price might be asking for too much.

Common pitfalls of lowballing

One of the biggest mistakes some buyers make when lowballing is ignoring market conditions. If similar homes are selling at or above asking, your below-market bid isn’t likely to get a second look. Lowballing works best when homes are sitting unsold, and sellers are getting anxious.

But if the home is in great shape and competitively priced, throwing out a low number without explanation can make you look uninformed.

Finally, lowballing without a plan can be a deal-killer. If you throw out an arbitrarily low number and the seller rejects it outright, what’s your next move? If you’re not prepared to negotiate, you could lose out on a home you want.

Tip: Justify your offer by pointing to needed repairs or outdated features to show why your number makes sense.

How to lowball the right way

The first step to making a successful lowball offer is research.

Look at similar home sales in your neighborhood. If a property has experienced multiple price cuts, the seller may be ready to negotiate.

“What is the motivation for the seller?,” said Rains. “An investor with no emotional ties to the property is fine to lowball, but if you lowball a seller selling their generational family home with memories, you are going to ruffle some feathers.”

And if they won’t budge? Know when to walk away. Overpaying just to keep negotiations going is never a smart move.

Tip: If your low offer gets rejected, don’t take it personally. If the home sits on the market, you may get another shot later—at your price.